Silicon Valley's Most Important Startup Factory, Y Combinator, Is Shrinking

Y Combinator will limit the number of early stage startups in its
Winter 2013 class.

In its last batch, the accelerator produced more than 80
companies.

YC founder Paul Graham writes on the
accelerator's blog that in Summer 2012, YC simply
grew too fast and "more things than usual broke" when it
increased the number of startups from 66 to 84.

When selecting YC's upcoming Winter batch, Graham says they were
much more selective and paid closer attention to what some of the
predictors to failure are.

This news comes just a few days after
Y Combinator founder Paul Graham announced that the
accelerator would cut down investments in each company by half.
Under the new fund, YC VC, YC will only invest $80,000 in each
startup instead of $150,000.

"We're decreasing the amount invested because experience showed
$150k was too much," Graham wrote last week.

"It's good for startups to get some amount of investment
automatically; it lets them continue working on ideas that still
look like ugly ducklings on Demo Day. But $150k was more than the
successful startups needed, and it sometimes caused messy
disputes in the unsuccessful ones."